Stellar Texas Job Growth in Above Average Wage Cities

The graph above shows how the Dallas, Houston, San Antonio and Austin metropolitan areas account for the vast majority of Texas population growth and job growth in the past decade. The entire rest of the state is in the olive shading. This fact exposes a common and untrue claim about Texas job growth, namely that is is adding a lot of jobs but they are low wage. Dallas, Houston and Austin all have wage levels that are above both the Texas and US averages.

Average Wages and wage growth 2001-10 are shown in the chart below. Texas is a little behind the US average but actually made up a little of the gap. We see the aforementioned average 2010 wages in three of the four big metro areas are above both Texas and US averages. As we just saw above, the bulk of Texas job creation, 509,560 of 860,740 total new jobs, took place in just those three cities. San Antonio is not far behind ($39,410 average) and with its low cost of living and absence of state income tax; San Antonio accounted for another 130,940 of the 860,740 total.

US & Texas Average Wages in 2001 plus Wage Growth to 2010

How does Texas job growth compare to US job growth? The next chart shows us how impressive the 860,740 jobs created in Texas was. The United States total was a loss of <883,250>. When we remove Texas from the USA total (for statistical purposes, not political secession!), we see the non-Texas US total was really a loss of <1.7> million jobs. The chart below also shows how geographically diverse the Texas job growth was; all four of the large metropolitan areas as well as the fifth largest city, El Paso and the border cities of Laredo and Brownsville-Harlingen far outpaced overall US job growth.

This dispersion of job growth is also found in other, smaller Texas MSAs, too:

McAllen-Mission

32%

Victoria

32%

Killeen-Temple

24%

Bryan-College Station

21%

Abilene

15%

Corpus Christi

12%

Waco

5%

Beaumont-Port Arthur

2%

Sherman-Denison

-3%

Chart by Author

Source: BLS OES, MSA data 2001 vs. 2010

A criticism of Texas job growth made by Paul Krugman is that Texas is a “still energy-heavy economy”. [2] Oil and gas are actually a small percentage of Texas jobs, however. “Mining, which encompasses oil and gas, employs only 2.1 percent of the Texas population – a surprising statistic for those unfamiliar with Texas economics.” [3] It is true some support jobs, for example teachers and restaurant workers, are indirectly employed by supporting the 2.1% directly involved in mining, but Mr. Krugman overstates the case. It is also true Texas is not the only state with mineral wealth. Some states with oil such as California and New York have been less diligent about developing their resources than states like Texas, Louisiana, North Dakota and Pennsylvania have. This impacts jobs.

The dispersion of job growth also proves false the claims Texas job growth is all energy. Houston, Beaumont and Corpus Christi are along the oil intensive Gulf Coast but are not exclusively energy, anyway (e.g. SYSCO Foodservice, headquartered in Houston). Dallas, Austin and San Antonio have more varied, non-energy economies. Dallas, the largest metro in Texas, is a major white-collar corporate center. Austin, home of Dell Computer and many chip companies, is a major technology and Venture Capital hub. The Rio Valley cities are agricultural centers with strong Mexican border trade. San Antonio is “Military City USA” with low paid soldiers as well as many white-collar back office functions, logistics, tourism and skilled manufacturing (e.g. new Toyota and Caterpillar plants).

Dallas, Austin and San Antonio certainly help account for the fact education, healthcare and professional and business services, account for 26 percent of all jobs in Texas. [3] Dallas Federal Reserve Bank CEO Richard Fisher pointed out, “Non-agricultural employment growth in Texas has compounded at an annual rate of 1.95 percent over 21 ½ years; that of California at 0.57 percent and New York at 0.19 percent.” Mr. Fisher noted in the period of June 2009-2011, Texas had accounted for 49.9% of net new jobs created in the United States. [3]

So where are the low wage Texas jobs some pundits keep talking about? They are not in the four big metropolitan areas, but instead are found in rural areas and smaller communities, many of which have been poor since before the US annexed Texas. This is hardly unique, however, as there are poor rural areas and declining small cities in upstate New York, downstate Illinois, interior California, etc. I am unaware of any state that has solved this disparity. In fact, other high wage metro areas are not located far from much lower wage, economically depressed cities in their own states, e.g. San Francisco ($59,820 avg. wage) vs. Fresno ($41,100) and Merced ($39,080) or New York City ($55,080) vs. Buffalo ($42,010) and Binghamton ($41,260).

I think another important point is how the direction of Texas wages is up and has, for decades, been slowly but surely closing in on national averages. There is something disingenuous about comparing the higher average wage levels in declining northern small cities with traditionally poor, but upcoming Texas cities. Rochester was the birthplace of Kodak. Buffalo was a very prosperous port and manufacturing city. Carrier invented air conditioning in Syracuse. The somewhat higher residual wages in some of these Rust Belt cities do not go as far due to taxes and living costs and their long term unemployment and wage trends are typically not at all promising. Would you rather build your future in Buffalo or San Antonio?

Another factor in Texas wages is the unfortunate fact that racial minority groups are lower-income in America. Whites are a minority in Texas. I should emphasize I do not believe there are any innate differences, simply differences in culture, role models, difficulties with English as a second language, etc. Metro San Antonio is majority Latino. High wage metro Houston is 41% Latino. It would appear the Texas economy is doing something right for many Hispanics in these cities. Many of the below average wage areas in the Rio Valley are almost exclusively Latino, such as Hidalgo County, home of McAllen ($32,470 avg. wage), which is 91% Latino, and Webb County, home of Laredo ($33,580 avg. wage), which is 96% Latino.

In conclusion, the data shows Texas job growth far exceeded the nation in 2001-2010 and the Texas job growth was concentrated in metropolitan areas with above average wages. This disproves the claims Texas is simply creating low wage jobs. There are low wage jobs in Texas, many in South Texas agriculture have been there in more or less the same form for centuries, but it takes some clever mental jujitsu to look at the actual record of Texas and not see the huge growth in population and in jobs in above average wage cities.